August 19, 2009

When two organizations as focused on customer service as Wells Fargo and Wachovia join together, it comes as no surprise when customer-centricity forms the cornerstone of their ensuing IT integration efforts.

According to Wells Fargo's Martin Davis, head of the Technology Integration Office with the $1.2 trillion asset San Francisco-based bank, minimizing the impact of the merger of Wachovia on the customers is the primary concern.

Davis, previously the CIO at Wachovia, acknowledges to BS&T that the customers might be touched in some way by the changeover to the combined company, such as changing account numbers. However, as with any merger, the goal is to make the transition as seamless as possible. For IT, this means ensuring the reliability of all the banks' systems, he says.

"What matters to the customers is the availability of the systems," Davis explains. "If you're going to deliver excellent customer service from an IT perspective, you have to make sure all the platforms are up. This is the No. 1 focus of the IT shop and it's no different for Wells Fargo than it was for Wachovia."

Neither bank was a stranger to M&A. Wells Fargo merged with Norwest in 1998, while Wachovia was involved with one of the largest mergers--First Union--in 2001 and acquired brokerage A.G. Edwards in 2007. Davis says members of both teams are bringing this expertise to the table. However, it is Davis, the alum of acquired Wachovia, who is overseeing the integration.

"Both banks tend to approach [IT integration] in a similar manner," he says. "But the culture at Wachovia was more process-oriented. We met [Wells Fargo] in the middle so it wouldn't be too heavy on process. Wachovia was more centralized and we decided early on to run the integration from a centralized perspective. The expertise has been very complementary."

In the experience of Celent senior VP, banking, Bart Narter, however, the dynamic usually runs other way around in acquisitions -- that is, the bank with the more centralized operating philosophy tends to be the acquirer. "It's interesting that the bank with the more centralized approach is being acquired. Usually acquirers have very centralized IT," the Boston-based firm's Narter says. "Wachovia is very strong in operations."

A Hybrid Approach

In addition to the expertise in integration, both banks bring a significant number of applications and platforms to the table as well. Paring them down is no different from the culling that takes place during any other merger, according to Wells Fargo's Davis. In this area, however, he says the business side is taking the lead on making these decisions. Once the lines of business make up their minds as to which business operating model to use, IT moves forward with it.

In general, it was decided that Wells Fargo's technology would form the backbone of the combined bank's consumer and community banking platform, including branch and online. However, "We are also blending the best of both platforms from a customer service model," adds Davis. "As we look at the business model the lines of business want to leverage, we also look to see if there is something from the Wachovia system we can use to enhance it. So there is some development effort required when we want to add a Wachovia feature [to an application]." For example, there is one case where a Wachovia platform became the dominant appliance -- the brokerage platform, which Davis says simply scaled much larger than Wells Fargo's.